When it comes to business car fleet management, there are a lot of costs to consider, from direct costs like insurance and fuel, to indirect costs caused by factors such as employee productivity.
But just because having a fleet is unavoidable, that doesn’t mean you have to spend a fortune on it. Here are five ways to cut costs on your business car fleet.
1. Review your ownership type
One of the first steps towards cutting costs is to calculate how efficient your current ownership model is. There are lots of different ownership types for business car fleets and each has its own advantages and disadvantages.
- Company car ownership. Your business owns (or leases) the car directly and provides the car to an individually-named employee. This is great for employee retention and gives you more control over your fleet, but the acquisition cost is high and the value of assets depreciates over time.
- Pool cars. A pool car is made available to all (or a specific group of) company employees. This means it is flexible in use, however it must be kept on the business premises overnight.
- Employee car ownership (ECO) schemes. An ECO is a structured scheme that enables a company to provide all of the benefits of a company car to its employees, without the burden of the tax. But very strict business/private mileage records must be kept.
- Grey fleet. The vehicle is owned by the employee, but used in part for essential business trips. So there are no acquisition, maintenance or running costs for the business, but there is a lack of control over the suitability of the vehicle.
- Contract hire. All vehicles in the fleet are leased, making it easier to manage and eliminating maintenance costs. On the other hand, the business does not own the cars and is tied to contracts.
We go into more detail about this in our eBook , but the final decision comes down to what would work best for your business. Ask yourself the following questions:
- How many miles are my employees doing per year?
- Are their journeys long or short?
- Do employees need access to a car on a permanent basis?
In reality it is likely that your ownership strategy will be a mix of some or all of the above.
Another possibility for cutting costs is to simply cut down your business car fleet – if you can. Review the number of cars you have and the number of cars you use to see if that number could be reduced. The average total ownership cost (TCO) for a light-duty vehicle ranges from £3,500 to £5,500 per vehicle, per year. So removing just five cars from your fleet could save you £17,500 every year!
2. Educate and coach your drivers to drive more efficiently
Having proficient drivers can save your fleet a surprising amount of money. According to the Energy Saving Trust, savings of 15% can be achieved by simply improving driving habits.
Here are some good habits you can instill in your drivers to help cut costs for your business:
- Reduce speed. Although driving a little bit faster may get your drivers to their destinations more quickly, what you save in time you lose in cost. According to the AA, driving at 70mph uses up to 9% more fuel than driving at 60mph. Introducing a telematics system with a driver behaviour program can encourage your drivers to keep their speed down (more on that later in the article).
- Cut idling. Idling is one of the biggest ways of wasting fuel. This is the process of sitting in a stationary car with the engine still running. Lots of drivers are in the habit of doing this when they are making phone calls, working through some administrative tasks, or simply listening to the radio. But it is a pure waste of fuel. Educate your drivers to turn off their engine if the car isn’t moving.
- Coasting. There are different driving techniques that can also help you to cut costs, like coasting. Most people like to “keep on the gas” up until the point that they need to brake. However, if you coast – which is taking your foot off the accelerator in advance of a junction/turning/traffic lights so that you can naturally slow down – then you will save fuel and also reduce wear and tear on the brakes.
- Always think about efficiency. There are lots of little things that can be done to cut costs while driving, all it takes is an energy efficient mind-set. Removing excess weight from a vehicle, such as a roof rack or box and unnecessary items from the boot/trunk can decrease fuel consumption and save money. Another way to save energy and reduce fuel consumption is to open the windows instead of leaving the air-conditioning running all the time.
These may seem like minor changes but if you have a large fleet of cars, these small adjustments could add up to huge savings.
3. Save on fuel costs
We’ve already talked about more efficient driving as a way to save on fuel but there are other ways to cut costs too. Fuel cards can be used to purchase fuel from many stations all over the country, and a select few offer discounts. Not only that, with a fuel card you will also gain access to online reporting tools that allow you to track expenditure and make smart changes to cut costs if needs be.
Another way to save on fuel is to simply drive less miles. If your drivers are travelling for meetings, then consider using an online meeting tool instead, or the good old-fashioned telephone! Ride-sharing is also a great option for saving fuel when colleagues are travelling to the same place for meetings or business trips.
4. Use technology
Technology is enriching every part of our lives, and business car fleet management is no different with more and more technology available to provide information and insight about business fleets.
For example, telematics is a game-changing solution when it comes to reducing costs and running your fleet more efficiently. A telematics system can give you a real-time overview of your fleet, enabling you to easily monitor overall performance or zoom in on particular performance indicators for your fleet or individual drivers. This insight enables you to make informed decisions about how the vehicles and drivers in your businesses are being used to improve their efficiency and effectiveness.
Many telematics systems also keep tabs on road and traffic conditions to ensure your drivers take the most efficient routes to their destination, saving time and fuel. This is a huge benefit for businesses because, according to the latest figures revealed as part of the TomTom Traffic Index, congestion is costing businesses approximately £915 million per year in lost productivity.
Telematics solutions can even capture the exact mileage of each vehicle, which can help you to appropriately schedule maintenance checks. It can alert you to any pending problems through vehicle fault codes, giving you the opportunity to address any maintenance issues before they become too costly. For example, identifying a fault with a turbo unit that could lead to major engine damage if not addressed at an early stage, could save you hundreds of pounds.
Another impressive advantage of telematics is that it could help reduce your business car insurance premiums. All of the data recorded by your telematics system not only allows you to monitor and improve driver behaviour, it also enables you to work with some insurance providers to reduce premiums based on an improving levels of driver behaviour. There are many insurance providers out there that specialise in working with companies in this way.
5. Automate your administration systems
A cost that can be so easily overlooked when it comes to fleet management is the time spent on administration tasks. If you manage all of your admin using paper-based systems, it’s probably time to think about using technology to make some of these tasks more efficient, releasing your office staff to do more value-adding tasks. Communicating with your workforce, including sending jobs to them, invoicing and billing, routing and scheduling, expense management, service and maintenance reminders, vehicle checks, and many more routine tasks can all be automated with a fleet management and/or telematics solution. Think of the time that would save for your office staff!
Managing and reducing costs is all about looking at your business car fleet in a holistic way and thinking about the small and significant changes you can make to save money while also creating a positive outcome for your business and the health and safety of your workforce. Don’t forget that keeping costs down is just one of the responsibilities of managing cars in your business. For more, see our free eBook: Every Car, Every Driver: Your Fleet Management Responsibilities .